Mistaken idea “Held to maturity is a management label”

A stated plan to keep a bond is not enough to support held-to-maturity classification. The conclusion requires positive intent and ability, supported at the relevant date. Liquidity needs, portfolio strategy, sale history, maturity terms, and later changes in facts can matter.

A diagnostic prompt says management labels a bond HTM because it does not want fair-value changes in income. A learner who accepts that reason has treated classification as a presentation choice. Correct the response by requesting the strategy approval, liquidity evidence, maturity information, and other current support. Once the classification is supplied, the learner can calculate amortized cost and the credit allowance. The schedule itself cannot establish intent or ability.